Gold futures were slightly lower on Tuesday, but were hanging around the highest price since early January, supported by persistent weakness in the U.S. dollar and a steady retreat in U.S. government bond yields to around two-week lows.

June gold
GCM21,
+0.34%

GC00,
+0.34%

was off 10 cents, or less than 0.1%, at $1,884.40 an ounce, after rising 0.4% a day ago. Monday’s settlement was the highest for a most-active contract since Jan. 7, FactSet data show.

The dollar, as measured by the ICE U.S. Dollar Index DXY, was off 0.2% at 89.637. A weaker dollar can make assets priced in the currency more attractive to overseas buyers.

“The US dollar is approaching yearly lows during early Tuesday trading. This greenback weakness results from the very low interest rates set by the Fed, which in turn led to an increase in short selling of the dollar as flows to other currencies increased,” wrote Ricardo Evangelista, senior analyst at ActivTrades.

Meanwhile, the 10-year Treasury yield TMUBMUSD10Y was around 1.596%, near the lowest level for the benchmark bond since early May. Falling yields can benefit precious metals and other commodities, which don’t offer a coupon, by reducing the opportunity cost of holding them against yield-bearing assets.

“The bulls continue to enjoy price uptrends in place on the daily charts—suggesting the path of least resistance for prices will remain sideways to higher in the near term,” wrote Jim Wyckoff, senior analyst at Kitco.com, in a daily note.

The Kitco.com analyst estimates that early resistance for bullion is at $1,891.30 and then at $1,900, while pegging support at the overnight low of $1,873.20.

July silver
SIN21,
+0.43%

SI00,
+0.43%
,
meanwhile, was 19 cents, or 0.7%, lower at around $27.72 an ounce, after rising 1.5% on Monday.



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